13 November 2012

Namibia: FIS to Come Under Provisional Curatorship

Windhoek — The High Court last Wednesday ordered to place under curatorship the insurance company that underwrites death and disability insurance for the defence and police forces, in a judgement that vindicates the Namibia Financial Institutions Supervisory Authority (Namfisa).

The court has given the company, Financial Insurance Services (FIS), until January 2013 to give sufficient reasons to the court why it should not be placed under a curator.

FIS has been at loggerheads with Namfisa since 2008, with the regulator not satisfied with the manner in which the company manages the hundreds of millions of dollars in policyholders' money. The policyholders are Namibian soldiers and police officers.

Not only has FIS failed at times to honour insurance claims, but the shareholders in the company have also turned against each other, with each faction accusing the other of embezzling millions of dollars from the company's accounts.

"I accordingly grant that the long-term insurance business of FIS Life Assurance Company be placed provisionally under curatorship," Judge Dave Smuts ordered last week. Michael Leach has been appointed as the curator.

The court found that there has been a number of irregularities that warrant Namfisa's concerns and subsequent request for curatorship. Chief among these concerns is FIS conducting business without the required disability insurance, among a host of other areas of non-compliance with the registrar's requirements.

"That is in my view a serious matter in the context of the Long Term Insurance Act. This factor, coupled with the effect of other cumulative effects of other issues where no time frame had been provided for compliance, would in my view tend to show that there was a reasonable and rational basis to the opinion on the part of the registrar that it was desirable to place the first respondent under curatorship, despite the progress made to address several areas of non-compliance," reads part of the judgement.

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